Tech

Hewlett-Packard may pay Hurd $40 million: report

NEW YORK (MarketWatch) -- Former Hewlett-Packard Co. Chief Executive Mark Hurd may be in line to receive up to $40 million in severance pay despite his admitted lapse in ethical rules, according to a media report.

Citing executive pay experts who combed over Hurd's employment agreements, the Financial Times of London reported over the weekend that Hurd's airtight contract with Hewlett-Packard
HPQ, -1.55%
didn't include specific circumstances in which the company would fire him "for cause," which would have enabled it to avoid paying severance.

Nell Minow, a U.S. corporate governance expert, told the newspaper that contracts of most chief executives include breaches of a company's ethical code of behavior as grounds for firing, among other conditions.

Hurd will get a severance payment of $12.2 million, according to an H-P filing. He also stands to walk away with more, including the right to sell his vested stock options during the company's next trading window, which opens Aug. 23 and closes Sept. 7. Hurd is also entitled to performance-based restricted shares granted to him in January 2008 and time-based restricted shares handed out in December 2009.

All told, the package could be worth as much as $40 million, the Financial Times reported.

In a statement made when he stepped down on Aug. 6, Hurd said, "... there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at H-P and which have guided me throughout my career."

If Hewlett-Packard's board attempted to fire Hurd for cause, it could have set up a difficult legal fight over his severance pay, experts told the Financial Times.

"The squishier the definition (of cause), the harder it is to prove cause," Charles Elson, of the University of Delaware, told the newspaper.

New York Times columnist Joe Nocera reported Saturday that Hurd's resignation appeared to be a "head scratcher" at first glance, because he had been wowing Wall Street as a turnaround expert and cost-cutter. His severance package could be worth up to $40 million or even $50 million, Nocera said.

Hurd's apparent problems with his expense reports provided a reason to force him to resign, but the real reason was that the board didn't trust him and employees didn't like him because of his cuts in research and development and other reasons, Nocera reported.

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